Akamai Reports Third Quarter 2012 Financial Results

CAMBRIDGE, Mass., Oct. 24, 2012 /PRNewswire/ -- 

  • Third quarter revenue of $345 million, up 23 percent year over year
  • GAAP net income of $48 million, up 14 percent year over year; or $0.27 per diluted share, up 17 percent year over year
  • Normalized net income* of $79 million, up 24 percent year over year; or $0.43 per diluted share, up 26 percent year over year

Akamai Technologies, Inc. (NASDAQ: AKAM), the leading cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere, today reported financial results for the third quarter ended September 30, 2012.  Revenue for the third quarter of 2012 was $345 million, a 23 percent increase over third quarter 2011 revenue of $282 million, and a 4 percent increase over second quarter 2012 revenue of $331 million.

(Logo: http://photos.prnewswire.com/prnh/20100225/AKAMAILOGO )

Net income in accordance with United States Generally Accepted Accounting Principles, or GAAP, for the third quarter of 2012 was $48 million, or $0.27 per diluted share, a 14 percent increase from third quarter 2011 GAAP net income of $42 million, or $0.23 per diluted share, and a 9 percent increase from second quarter 2012 GAAP net income of $44 million, or $0.24 per diluted share.

The Company generated normalized net income* of $79 million, or $0.43 per diluted share, in the third quarter of 2012, a 24 percent increase over third quarter 2011 normalized net income of $63 million, or $0.34 per diluted share, and a 1 percent increase from the prior quarter normalized net income of $78 million, or $0.43 per diluted share. (*See Use of Non-GAAP Financial Measures below for definitions.)

"Akamai experienced its fourth consecutive quarter of accelerating revenue growth and delivered higher margins," said Paul Sagan, President and CEO of Akamai.  "We continued to capitalize on our investments in cloud computing, web security, mobile services, and online video by expanding our product portfolio, while effectively managing the cost and efficiency of our network. These efforts paid off in both the Company's top and bottom line performance."

Adjusted EBITDA* for the third quarter of 2012 was $157 million, up 28 percent from $122 million in the third quarter of 2011, and up 9 percent from $143 million in the prior quarter.  Adjusted EBITDA margin* for the third quarter was 45 percent, up two points from the prior quarter and from the same period last year.  (*See Use of Non-GAAP Financial Measures below for definitions.)

Cash from operations was $141 million in the third quarter of 2012, or 41 percent of revenue.  At the end of the third quarter of 2012, the Company had over $1 billion in cash, cash equivalents and marketable securities.

Sales through resellers and sales outside the United States accounted for 22 percent and 29 percent, respectively, of revenue for the third quarter of 2012.

Share Repurchase Program
During the third quarter of 2012, under a share repurchase program that was approved by the Board of Directors in May 2012, the Company repurchased approximately 1 million shares of its common stock for $37 million, at an average price of $31.53 per share.  During the three quarters ended September 30, 2012, the Company repurchased approximately 4 million shares of its common stock for $112 million, at an average price of $31.31 per share. The Company has $68 million remaining on its current authorization, which runs through April 30, 2013.

The Company had approximately 177 million shares of common stock outstanding as of September 30, 2012. 

Quarterly Conference Call
Akamai will host a conference call today at 4:30 p.m. ET that can be accessed through 1-800-706-7745 (or 1-617-614-3472 for international calls) and using passcode No. 82472044.  A live Webcast of the call may be accessed at www.akamai.com in the Investor section.  In addition, a replay of the call will be available for one week following the conference through the Akamai Website or by calling 1-888-286-8010 (or 1-617-801-6888 for international calls) and using passcode No. 96448745.

About Akamai
Akamai® is the leading cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere.  At the core of the Company's solutions is the Akamai Intelligent Platform™ providing extensive reach, coupled with unmatched reliability, security, visibility and expertise.  Akamai removes the complexities of connecting the increasingly mobile world, supporting 24/7 consumer demand, and enabling enterprises to securely leverage the cloud.  To learn more about how Akamai is accelerating the pace of innovation in a hyperconnected world, please visit www.akamai.com or blogs.akamai.com, and follow @Akamai on Twitter.

 

Condensed Consolidated Balance Sheets

(dollar amounts in thousands)

(unaudited)








Sep. 30, 2012


Dec. 31, 2011

Assets





Cash and cash equivalents


$ 182,650


$ 559,197

Marketable securities


282,579


290,029

Accounts receivable, net


236,232


210,936

Deferred income tax assets, current portion


6,444


6,444

Prepaid expenses and other current assets


45,784


55,414

Current assets


753,689


1,122,020

Marketable securities


593,105


380,729

Property and equipment, net


331,218


293,043

Goodwill and other intangible assets, net


803,976


498,300

Other assets


15,365


7,924

Deferred income tax assets, net


42,101


43,485

Total assets


$ 2,539,454


$ 2,345,501






Liabilities and stockholders' equity





Accounts payable and accrued expenses


$ 184,365


$ 123,618

Other current liabilities


28,555


24,774

Current liabilities


212,920


148,392

Other liabilities


66,596


40,859

Total liabilities


279,516


189,251

Stockholders' equity


2,259,938


2,156,250

Total liabilities and stockholders' equity


$ 2,539,454


$ 2,345,501






 


Condensed Consolidated Statements of Operations

(amounts in thousands, except per share data)

(unaudited)














Three Months Ended


Nine Months Ended



Sep. 30,


Jun. 30,


Sep. 30,


Sep. 30,


Sep. 30,



2012


2012


2011


2012


2011













Revenues

$                345,321


$                    331,306


$                    281,856


$            996,075


$           834,798













Costs and operating expenses: 











Cost of revenues * +

109,995


107,457


93,284


320,018


271,999


Research and development *

19,351


17,542


13,542


54,373


37,142


Sales and marketing *

75,924


75,882


54,520


219,096


160,722


General and administrative * +

54,511


57,997


50,834


168,214


140,710


Amortization of other intangible assets

5,381


5,463


4,185


15,611


12,754


Restructuring (benefit) charge

-


(46)


158


14


158


Total costs and operating expenses

265,162


264,295


216,523


777,326


623,485


Operating income

80,159


67,011


65,333


218,749


211,313













Interest income, net

1,593


1,626


3,002


4,865


9,058


Other (expense) income , net

(241)


1,131


(188)


449


(1,330)


Income before provision for income taxes

81,511


69,768


68,147


224,063


219,041


Provision for income taxes

33,280


25,529


25,862


88,366


78,218


Net income

$                  48,231


$                      44,239


$                      42,285


$            135,697


$           140,823













Net income per share:











    Basic

$                      0.27


$                          0.25


$                          0.23


$                  0.76


$                 0.76


    Diluted

$                      0.27


$                          0.24


$                          0.23


$                  0.75


$                 0.74













Shares used in per share calculations:











    Basic

177,455


178,547


183,085


178,040


185,515


    Diluted

181,053


181,817


185,704


181,738


189,089













* Includes stock-based compensation (see supplemental table for figures)


+ Includes depreciation and amortization (see supplemental table for figures)












 

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)


































Three Months Ended


Nine Months Ended






Sep. 30,


Jun. 30,


Sep. 30,


Sep. 30,


Sep. 30,






2012


2012


2011


2012


2011















 Cash flows from operating activities:











 Net income

$              48,231


$             44,239


$             42,285


$           135,697


$          140,823


 Adjustments to reconcile net income to net cash
 provided by operating activities:












 Depreciation and amortization 

53,457


50,112


41,761


149,203


124,228



 Stock-based compensation

22,635


25,621


15,141


69,180


42,465



 Provision for deferred income taxes, net

826


-


20,906


826


20,906



 Excess tax benefits from stock-based
 compensation

(2,540)


(1,635)


(610)


(17,589)


(11,460)



 Loss (gain) on investments and disposal
 of property and equipment, net

142


(107)


(176)


(62)


(172)



 Provision for doubtful accounts

(345)


(86)


782


(61)


1,236



 Changes in operating assets and liabilities:













 Accounts receivable

(27,974)


7,803


(8,277)


(21,587)


(7,821)




 Prepaid expenses and other
 current assets

2,131


4,663


(919)


11,103


(78)




 Accounts payable, accrued
 expenses and other current
 liabilities

44,591


15,939


445


54,732


(5,268)




 Accrued restructuring

(28)


(725)


(148)


(2,897)


(180)




 Deferred revenue

1,401


2,667


796


5,542


(1,386)




 Other noncurrent assets and
 liabilities 

(1,031)


1,061


4,303


(536)


13,355


 Net cash provided by operating activities

141,496


149,552


116,289


383,551


316,648















 Cash flows from investing activities:












 Cash paid for acquired businesses,
 net of cash received

(14,392)


-


-


(306,030)


(550)



 Purchases of property and equipment
 and capitalization of internal-use software
 costs

(60,294)


(55,539)


(47,317)


(159,177)


(136,292)



 Proceeds from sales and maturities of
 short- and long-term marketable securities

98,567


134,171


388,983


350,152


900,120



 Purchases of short- and long-term
 marketable securities

(137,809)


(135,845)


(149,318)


(554,303)


(727,453)



 Proceeds from the sale of property and
 equipment

-


2


47


12


135



 Decrease in restricted investments held for
 security deposits

-


-


-


-


221



 Net cash (used in) provided by investing
 activities

(113,928)


(57,211)


192,395


(669,346)


36,181















 Cash flows from financing activities:












 Proceeds from the issuance of common
 stock under stock option and employee
 stock purchase plans

6,066


15,491


1,183


28,635


13,305



 Excess tax benefits from stock-based
 compensation

2,540


1,635


610


17,589


11,460



 Taxes paid related to net share settlement
 of equity awards

(2,370)


(2,541)


(2,173)


(26,566)


(5,680)



 Repurchase of common stock

(36,523)


(67,213)


(155,125)


(111,649)


(247,738)


 Net cash used in financing activities

(30,287)


(52,628)


(155,505)


(91,991)


(228,653)
















 Effects of exchange rate changes on cash and
 cash equivalents

2,373


(1,441)


(3,209)


1,239


(443)
















 Net (decrease) increase in cash and cash equivalents

(346)


38,272


149,970


(376,547)


123,733


 Cash and cash equivalents, beginning of period

182,996


144,724


205,629


559,197


231,866


 Cash and cash equivalents, end of period

$            182,650


$           182,996


$           355,599


$           182,650


$          355,599

 
























Three Months Ended


Nine Months Ended



Sep. 30,


Jun. 30,


Sep. 30,


Sep. 30,


Sep. 30,



2012


2012


2011


2012


2011


Supplemental financial data
(in thousands):






















Stock-based compensation:











Cost of revenues

$                     684


$                   884


$                  634